Trying to find financing for your business can be tough in any economic climate. Whether you’re looking for start-up funds, capital to expand, or money to hold on through the tough times, the demand for cash is always present and sadly money doesn’t grow on trees.
Given our current economy, getting affordable funding is as tough as ever. Below are 10 financing techniques you can use to help and what you should know when considering each.
1. Consider Factoring
Factoring is a finance method where a company sells its receivables at a discount to get cash up-front. This method is often used by companies with poor credit or by businesses such as apparel manufacturers, which have to fill orders long before they get paid. It’s also an expensive way to raise funds. Companies selling receivables usually pay a fee that’s a percentage of the total amount.
For example, if you pay a 2 percent fee to get a 30-day advance, that’s equal to an annual interest rate of about 24 percent. It’s that very reason, the factoring business has gotten a bad reputation throughout the years. Still, the economic downturn has forced companies to look for alternative financing methods.